July 26, 2002—A comparison of business costs in nine industrial countries in North America, Europe and Japan, by KPMG LLP, revealed that Canada is the least costly place to do business, edging out the United Kingdom and Italy. Germany and Japan are the most expensive of those studied, while the United States ranked seventh, descending from third place two years ago in a similar study, due to rising strength of the U.S. dollar.
KPMGs study, entitled Competitive Alternatives, measured 27 components such as labor, taxes and utility costs applied to business operations in Austria, France, Italy, Germany, the Netherlands, U.K, Canada, U.S., and Japan. The research includes an analysis of these costs in 86 cities across those nine countries. The studys basis for comparison is the after-tax cost of startup and operation for 12 specific types of business, over a 10-year time span.
“In relocating, it is important for companies to explore all geographic options in order to pinpoint those jurisdictions that represent cost-competitive locations,” said Kerstin Nemec, partner-in-charge of KPMGs Strategic Relocation and Expansion Services.
“Some of the major factors affecting business costs since our last study in 1999 are related to transportation, telecommunications and income taxes. We have seen a significant drop in the cost of operating a business in most countries due to changes in these areas,” said Nemec. “For example, for European countries, air freight cost reductions are in excess of 50 percent; telecom costs in all European countries are down 65 to 80 percent; and income taxes continue a downward trend in most countries.”
For a list of the nine countries studied and their cost indexes for 2002, see the KPMG Competitive Alternatives study online.
